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Cash Machine Seeks High Yield and Low Risk
12/28/2020 5:00 am EST
When looking for income assets to own when inflation and bond yields are rising, we want to steer our focus to equities in companies that can raise prices for their goods and services, suggests Bryan Perry, growth and income specialist and editor of Cash Machine.
As money comes out of low-yielding fixed income, it will rotate into inflation and rate-sensitive equities. As such, the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) is a solid addition to add both attractive yield and capital appreciation potential.
With assets of $2.2 billion, this broadly diversified ETF is made up of the S&P 500’s best blue-chip stocks that throw off hefty dividend payouts.
he fund has 49 total holdings, including utilities, real estate, information technology, materials, communications services, consumer staples, energy, financials, health care and consumer discretionary.
It is a real “who’s who” of big dividend-paying companies that are poised to see their share price trade back up to pre-pandemic levels. This is a made-for-income investor ETF that is seeking blue-chip income and growth, while trading at an 18% discount to its February high.
The fund pays a monthly dividend of roughly 15 cents per share, per the table below, made up entirely of regular dividend income from its underlying assets.
No leverage, short-term gains, long-term gains or return of capital contributes to the monthly dividend payments — just dividends from the assets themselves. As a result, SPHD is suitable for every account in every portfolio. The current annual dividend yield is 4.90%.
Finding a blue-chip, investment-grade asset trading at an 18% discount to its prior high and paying out nearly a 5% yield on a monthly basis is a fortunate situation for income investors seeking to add capital to an elevated market. Buy under $38.
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